are we shaping our future? are we shaping national …...for 2016/17, the budget deficit is expected...

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Sector reviews The reforms

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Are we shaping our future?

National Budget 2016


National Budget 2016

PwC

Contents

Our opinion 3

Tax Perspective 6

Public Finance 8

Sector reviews 11

Taxation 25

About PwC 42


by André Bonieux Senior Partner PwC Mauritius E: [email protected]

mailto:[email protected]

PwC Budget Summary 2016

Our Opinion

Tax Perspective

Public Finance

Sector Reviews

Taxation

About PwC

Financial

Services

SMEs &

Manufacturing

Agri-Business

Public Sector

Real Estate

ICT

4

Finance Minister Hon. Pravind Jugnauth gave a mixed bag of reforms today. He started off by saying that we had to be bold. Indeed, he came with a number of promising measures but we feel that he could have done more on the potential reforms. On the positive side, he announced measures to reform business facilitation including an acceleration in issuing Building and Land Use Permits, the removal of constraints around Property Development Schemes, e-licensing facilities, new powers to the BOI to clear projects already in the pipeline, authorisation for non-citizens to acquire apartments and business buildings. This is highly encouraging. He also announced the merger or combination of a large number of public bodies - we all hope for greater efficiency. Interestingly, he mentioned that the SIC would be disposing of its mature investments. Is this a way of saying that Government would finally get out of casinos? Time will tell. We appreciate the reforms for more digital applications within Government, including the recruitment of a Dedicated Chief Information Officer for each ministry.

The Minister also announced the implementation of the new metro, the Metro Express. We are concerned that this project will be financed and run by Government even though he said that the construction will start with the Victoria terminal on a BOT basis. When we know of the management of the NTC, one can only dread how much this project will cost to operate – all funded by the taxpayer. A PPP would be far more cost effective, and the attractiveness of such a project properly evaluated. The Minister announced a monthly allocation of up to Rs9,520 for a family of five. This is the first foray in such welfare payments by a government and the cost has been estimated at Rs500M over a 2 year period. If limited to that, the country can probably afford the measure, but the difficulty now will be in managing this scheme. Let us hope that processes are in place and that the money only goes to the truly needy. In spite of a number of positives, this government appears to be digging its heels in old-fashioned structures. The Metro Express mentioned above to start with, investments in water continue to be solely funded by government and job creation continues to be government's responsibility - statistics show that civil servants will increase to 62,365 next year, an increase of 19% over June 2016. This is simply amazing!

…/cont.

André Bonieux Senior Partner


Our Opinion


Our Opinion

Tax Perspective

Public Finance

Sector Reviews

Taxation

About PwC

Financial

Services

SMEs &

Manufacturing

Agri-Business

Public Sector

Real Estate

ICT

5

Are we shaping our future? (Continued)

A reform that was expected, but unfortunately not discussed today, was around targeted social benefits – health, education, pensions, transport, food subsidies. These benefits initially targeted for the needy are now for everyone’s benefit and probably costing a fortune to the national treasury. Another lost opportunity seems to be in recurring expenditure figures with an increase of 13.8% over 2015/16 whilst revenues from taxes are expected to grow by 9.3%. So whilst tax buoyancy appears healthy, Government is spending much more than before and this is a year where inflation is estimated at a mere 2%. The funding gap will be huge when the grant from India will have been used up. The increase in Government expenditure and the resulting 3.3% budget deficit also remains a concern. Our conclusion is that this is a no-tax budget and that the Minister has made a genuine attempt at reforming the economy, but not to the extent we expected.

Our Opinion

André Bonieux Senior Partner

Tax perspective

by Dheerend Puholoo Associate Director Tax E: [email protected] T: +230 404 5079



Our Opinion

Tax Perspective

Public Finance

Sector Reviews

Taxation

About PwC

Financial

Services

SMEs &

Manufacturing

Agri-Business

Public Sector

Real Estate

ICT

7

Tax Perspective Dheerend Puholoo Associate Director

Tax Perspective

The National Budget 2016/2017 focuses on ten key strategies including fostering a wave of modern entrepreneurs, entering a new economic cycle focusing on innovation, boosting exports and private investments, and ensuring macro-economic stability and sound public finances. In the wake of the recent protocol in relation to the revision of the India/Mauritius Tax Treaty, it comes with no surprise that the Minister has announced measures to revamp the Global Business Sector. Global companies registered as Global Headquarters Administration companies in Mauritius will be granted a tax holiday of 8 years, whilst Treasury Management Centres, Investment Banks and law firms established in Mauritius will enjoy a tax holiday of 5 years. Considering that, at present, companies registered as Regional Headquarters enjoy partial tax exemption, it begs the question whether the tax holiday will have the desired effect. More importantly, in the present international tax environment, the tax incentives for global business companies will be attached to substance requirements. Income tax exemption has also been extended to Asset and Fund Managers managing a minimum asset base of USD100m. This measure paves the way to attracting competencies to make Mauritius a more robust international financial centre. The budget also provides measures for SMEs: the extension of the 8 year tax holiday to new enterprises set up by individuals or co-operative societies; the removal of the Rs100m investment threshold in plant and machinery to qualify for the investment tax credit for specified industries; and the increase in the rate of the investment tax credit from 5% to 15% for companies engaged in manufacturing of textiles, wearing apparels, ships and boats, computers, pharmaceuticals and films.

On the administrative front, the Mauritius Revenue Authority (MRA), is taking on the responsibility to collect social security contributions. This is a clear step towards the harmonisation of collections from taxpayers. With the increasing number of tax disputes, the introduction of an Alternative Dispute Resolution (ADR) mechanism for assessments exceeding Rs10m should help reduce the burden on the Assessment Review Committee and the Supreme Court. This assumes an effective mechanism to achieve the expeditious resolution of tax disputes. Perhaps, an ADR mechanism can be put in place to cater for low value assessments. There will now be a time limit of two years to submit amended tax returns. This seems an unjust measure considering that the MRA can raise assessments for the past three years. In contrast, it is a fair measure to protect taxpayers from penalties and interest on disputed tax assessments that relate to doubtful interpretation and application of the tax laws. From a VAT perspective, a non VAT- registered person sourcing services from abroad will be required to apply VAT on the services and remit same to the MRA. Whilst the measure is aimed at bringing a level playing field between domestic and foreign businesses, it would increase the administrative burden on taxpayers. Overall, the National Budget 2016/2017 brings about some welcome measures for better tax administration as well as tax incentives aimed at stimulating the economy. However, certain measures announced appear to go against the objectives of tax fairness and simplication.

Public Finance

by Mehtab Aly Senior Manager Advisory Deals E: [email protected] T: +230 404 5069



Our Opinion

Tax Perspective

Public Finance

Sector reviews

Taxation

About PwC

Financial

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Public Sector

Real Estate

ICT

9

Public Finance

So, growth is roughly a third lower than expected. In these circumstances, it is a feat that the budget deficit for 2015/16 hit the original target of 3.5% of GDP. This deficit reflects an undershoot in both revenue and public spending. Of particular note is the lower capital expenditure of around Rs2bn for the year.

For 2016/17, the budget deficit is expected to decline to Rs20bn i.e. 3.3% of GDP. We note that the External Grants contribute to a large extent to this improvement in the budget deficit.

Public Finance

Public Finance Mehtab Aly Senior Manager

A year ago, the economy was predicted to grow by 5.3% in 2015/16 and by 5.7 % in 2016/17. It now sees growth of 3.4% this year and expected growth of 4.1% in 2016/17.

Public debt (international definition)

Public debt as a percentage of GDP has reached 65.0% of GDP in 2015/16. The Government plans to reduce this to 62.8% in 2016/17, though this is not due to an expected debt reimbursement but rather to an improved forecast GDP growth.

In absolute terms, total debt amounted to Rs274bn in FY15/16, with more than 75% being contracted on the local market.

2011 3.2%

2012 1.8%

2013 3.7%

2014 3.2%

2015/16 3.5%

2016/2017 3.3%

!

2012 57.0%

2013 59.3%

2014 60.9%

2015/16 65.0%

2016/2017 62.8%

@

! @

Budget deficit as a percentage of GDP Public debt as a percentage of GDP

Budget deficit


Our Opinion

Tax Perspective

Public Finance

Sector reviews

Taxation

About PwC

Financial

Services

SMEs &

Manufacturing

Agri-Business

Public Sector

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ICT

10

33%

19% 13%

9%

7%

8%

2% 9%

Value Added Tax 31%

Customs Duty and Excise

Duty 18%

Corporate Income Tax

12%

Personal Income Tax

8%

Property taxes 6%

Other taxes 8%

Grants and social

contributions 8%

Other revenues

9%

Public Finance

Government revenues are expected to increase from Rs88bn in 2015/16 to Rs102bn in 2016/17. We note a large increase in External Grants - from less than Rs350m in 2015/16 to Rs6bn in 2016/17.

Otherwise, indirect taxes remain the most important source of Government income (around 50%) while taxes on income (personal and corporate) make up 20% of government income.

The budgeted expenditure is forecast at Rs117bn in 2015/16 with a 13% increase in employee remuneration following the recruitment of around 10,000 public servants in the coming year.

Only Rs16bn of the Public Sector Investment Programme was spent in 2015/16 compared to the budgeted Rs27bn. We note that, year after year, investment programmes fall well short of budget, mainly as a result of delays in implementation. An investment of Rs35bn is expected in FY16/17.

Government spending

Public Finance (continued)

Public Finance

Mehtab Aly Senior Manager

Government revenue

23%

8%

13% 21%

19%

3%

12%

Employee remunerat

ion 25%

Subsidies and

grants 8%

Social Benefits

10%

Capital expenditu

re 21%

Interest 19%

Purchase of goods

and services

3%

Other expense

14%

2015/16

2016/17

2015/16

2016/17

Sector reviews

PwC Budget Summary 2016 12

Budget 2015 - Retrospective

Measures

implemented

against those

announced in

previous budget None

implemented

All

implemented

• GBC 2 companies allowed to invest in listed securities

• The Mauritius International Derivatives & Commodities Exchange (MINDEX) will be set up in the Rose Belle Business Park, with an initial seed capital of Rs50m

• Mauritius to become a full-fledged International Arbitration Centre

• An Investment Banking and Corporate Advisory Licence will be introduced

5-8 years of tax holidays to

certain licencees of the FSC

Mandatory audit firm rotation for

banks every 5 years and for listed

companies every 7 years

Key metrics

Financial Services

• 8 year corporate tax holiday for Global Headquarters Administration company

• 5 year corporate tax holiday for Treasury Management Centre company

• 5 year corporate tax holiday for Overseas Family Corporations

• 5 year corporate tax holiday for Investment banks

• 5 year corporate tax holiday for Foreign Ultra High Net Worth Individual investing a minimum of USD25m in Mauritius

• 5 year corporate tax holiday for law firms providing legal advisory and international arbitration services to global business clients

• 5 years personal tax holiday to an Asset and Fund Manager licensed by Financial Services Commission (FSC) and managing a minimum asset base of USD100m

Tax holiday

Reaching out to new markets


Financial Services

• Investment banking business will no more be considered as a bank and will now be regulated by the FSC

• A foreign bank willing to establish a branch or subsidiary in Mauritius will have to provide a statement of no objection from the regulatory authority of its country

• Credit Unions will no longer be supervised by the BOM

• Subsidiaries of financial institutions incorporated outside Mauritius will have to submit consolidated financial statements to the BOM one month after publication

• Mandatory audit firm rotation every 5 years for banks

• The Receiver is now allowed to discontinue the operations of a bank in receivership

• Introduction of a National payment Systems Bill to regulate e-payment transaction and setting up of a National Payment Switch by the Bank of Mauritius (BOM)

• A Deposit Insurance scheme legislation to protect depositors and guarantee the repayment of their deposits will be introduced

• A legislation for the setting up of an Asset Management Company to take over from banks, non performing loans secured by residential and commercial property will be enacted

• A Limited Liability Partnership Bill will be introduced

• BOM allowed to monitor intra group transactions at bank holding company level

• The Banking Services Review Panel will be abolished

• BOM allowed to grant advances only against securities issued by the Government or the BOM

• BOM allowed to used data in the Mauritius Credit Information Bureau for supervisory purposes and financial stability assessment

New legislations

Amendments – Bank of Mauritius Act

Amendments – Banking Act


Financial Services

Amendments – Banking Act (Cont.)

• The Receiver will not be allowed to restore the financial institution back to its Board of Directors

• Simplified licencing procedure for a temporary financial institution to take over the assets and liabilities of a financial institution in receivership

• The operation of a temporary financial institution will be limited to a maximum of 2 years

• The Banking Act will prevail in the event of any conflict with other laws, other than the BOM Act

• The BOM may now refuse an application for a banking licence for a group which is predominantly engaged in banking activities and which already holds a banking licence

• Fees payable by money changers will be reviewed

• The BOM may now issue guidelines to holding companies incorporated in Mauritius that have at least one subsidiary that is a bank or a non-bank deposit taking institutions which are classified as systemically important

• The BOM may now carry out an independent valuation of the assets of a bank which holds collateral


Financial Services

• The credit agreements’ limit regulated under the Act will be increased from Rs2m to Rs3m

Financial Services Act

• Issue of a new Global Legal Advisory Licence allowing international law firms to set up offices in Mauritius. They will however not be allowed to litigate in Mauritius

• A Family Corporation Licence which allows high net worth individuals to benefit from residency will be introduced

• Application of licences will be made online

• The FSC will regulate securities for Preferential Offer Rules including Private Placement Schemes for 25 investors or more who individually invest Rs1m

Legislative updates

Borrowers Protection Act

• Mandatory audit firm rotation every 7 years for listed entities

• Penalties and fines on licensees of the Financial Reporting Council will be introduced

• A standardised centralised online KYC database for non-bank financial services sector will be introduced

• Mauritius will be developed as the clearing centre for Renminbi for the African Region as well as for African currencies and securities

Financial Reporting Act

Enhancing business facilitation



Measures

implemented

against those

announced in


implemented

All

implemented


Measures

implemented

against those

announced in


implemented

All

implemented

• 4 industrial parks to support the modernisation of production techniques will be set up

• Bid Price-Preference for ‘Made in Moris’ products will be increased from 10% to 20%

• Boosting up of gold and other precious metals trading activities

• Materials used in manufacture of medical devices exempted from customs duty

• New Pharmaceutical Village in Rose Belle

SMEs & Manufacturing

• Tax credit increased from 5% to 15% over 3 years in respect of expenditure in new plant and machinery (excluding motor cars) to companies engaged in manufacturing on textiles, wearing apparels, computers, pharmaceuticals, ships and boats and production of films

• Minimum investment of Rs100m criteria to qualify for tax credit will be removed

• Rs150m to be injected in an SME Venture Capital Fund

• No VAT on 3D printers

• Interest rate under the SME Financing Scheme reduced from 7.4% to 6%

• Leasing Equipment Modernisation Scheme facilities will be reintroduced

• Amendment to Freeport Act on manufacturing activities - 80% restriction of the annual export towards Africa reduced to 50%

Key metrics

3 years Suspension on trade fees for licences of Rs5,000 and below

8 years Tax holiday to start up enterprises registered with SMEDA

4 years Tax holiday to enterprises registered with SMEDA having less than Rs10m of turnover effective 01 July 2016

Rs50m Grant under the National SME Incubator Scheme

Rs100m Line of credit for factoring services

40% Reduction in air freight costs to Europe in textile and apparel sector over a two-year period



Measures

implemented

against those

announced in


implemented

All

implemented Agri-Business

Key metrics

• Rs10m to industrial milk processors to support small cow keepers with artificial insemination and other veterinary services

• Outstanding interest on certain start-up loans taken by planters, breeders and fishermen prior to 01 July 2012 will be waived, provided all capital paid back before 30 June 2017

• 50% of outstanding loan balances and interest contracted by pig breeders will be waived subject to payback of remaining balance before 30June 2017

• Subsidy on freight cost for export of flowers and vegetables

• Rs20m for the setting up of an exclusive Bio Farming/Organic zone at Britannia

• Additional revenue of Rs1,820 per tonne for planters producing up to 60 tonnes of sugar for crop 2016

• Exemption of corporate tax for cooperative societies on all non-sugar agricultural activities

• Rs 10m contributory insurance scheme for non-sugar crops

• Introduction of 15% levy on specific pesticides, herbicides and fruit ripeners

• New tea nursery at La Brasserie granting seedlings to growers and subsidising fertilizers

• Re-opening of ex-Dubreuil tea factory to promote tea and other agro-processing activities

Rs150,000 Increase in grant facility for sheltered farming

Rs5,000 For every new female calf reared up to lactating phase

Rs16m To purchase protective net and bags for litchi and banana growers

Rs7m In creating bee-keeping zones

15% Levy on specific pesticides

Rs10m For setting up heifer farm at Melrose



Measures

implemented

against those

announced in


implemented

All

implemented

Rsb

Public Sector

Planned expenditure Budget

2017

Actual

2016*

Budget

2016

Social protection 30.1 27.1 27.0

General public services 30.4 27.7 26.6

Education 16.4 14.7 14.7

Public order and safety 11.7 10.3 10.6

Health 11.2 10.0 10.0

Economic affairs 11.6 8.4 9.0

Housing and

community amenities 2.5 2.6 3.4

Environmental

protection 1.6 1.6 1.9

Recreation, culture and

religion 1.1 0.9 1.0

Total 116.6 103.3 104.2

Comments on planned expenditure:

• Actual figures for 2016 is broadly in line with last year’s budget

• A 13% increase is anticipated in 2017 compared to 2016 actual

• 52% of resources allocated to Social protection and General public services in 2017 ( vs 42% in 2016)

* Provisional figures for Actual 2016

Reforms anticipated to change the public sector DNA:

• Consolidation of certain common public activities

• Re-definition of roles and responsibilities of major governmental institutions

• Restructure MHC, the NHDC and the SIC’s activities

• Addressing non-performing public sector bodies through the submission of a

turnaround plan before October 2016

• Speeding-up of procedures for the implementation of capital projects

• Harnessing reforms through amendments of various Acts and Regulations

Social protection

• Rs20.7b earmarked for administration of ageing population

• High level committee to improve both pension system and benefits

Launching the Marshall Plan Against Poverty:

• Rs3.6b allocated to combat those social ills

• New monthly subsistence scheme for every adult on the Social Register

• Grant to support students from poor families at different levels

• Improvement of student learning in 5 ZEP schools

• Launch of a programme of decent shelters for the absolute poor

• Support to low income families for the construction and completion of

housing units

• Entitlement to a Basic Invalidity pension irrespective of age

• Tertiary scholarships for 5 students with disabilities to pursue tertiary

studies locally.

• Strategic paper to review Special Education Needs

PwC

Public Sector (Continued)

• New mass transit system along with a network of modern

integrated urban terminals

• The Victoria Terminal to be constructed under a BOT

model. Provision will be made for 1,000 hawkers

• Major transformation of Port Louis skyline

• Road decongestion programme with the assistance of

Korean Expressway Corporation

• Investment in airport infrastructure:

- New Integrated Government Clearance Centre in

the Cargo Village and a modern Control Tower at

the cost of around Rs770m

- CEB to invest Rs425m in a sub-station to cater for

Cargo and Freeport power requirement

- Setting up of a Regional Aviation Training Academy

with the help of the Chinese Government to serve

the African and Indian Ocean Rim region

• Strategic focus to enhance petroleum hub facilities

• New petroleum port at Albion

• 35 hectares of reclaimed land for petroleum

storage, logistics and fishing activities

• Setting-up of a Special Purpose Vehicle (ownership open to

public at large) to produce solar voltaic systems.

• CEB to invest:

- Rs400m to increase grid absorption capacity

- Rs200m to upgrade the Sans Souci plant capacity

• Government will facilitate production of energy from bio-

mass, including cane tops and trash.

• The Electricity Act and the CEB Act will be amended to

accelerate the permit approval process of renewable energy

investment projects

• Public infrastructure work:

- Construction of pavements across the island

- Rehabilitation works for hard shoulder

- Setting up of handrails

- Restore all road markings and signage

- Repairing lighting along motorways

- Address beach erosion and coastal land degradation

• Setting up of a dedicated Land Drainage Authority.

Major infrastructure works planed as a “stimulus” to the local economy:


PwC

• New waste management projects:

- New system for recycling electronic and electrical wastes

- Centralisation of Hazardous Waste Facility at La

Chaumière

- New system for recycling of waste tyres

- 7,000 households to be provided with Compost Bins and

Mixing Tools

• Expansion of the Cardiac Centre at the Victoria Hospital to reduce

the waiting list for heart surgery

• New ENT hospital will be constructed at Vacoas

• Renovation/upgrading of SSR National Hospital

• New eye hospitals (Moka) and regional hospital (Flacq)

• Improvement of palliative care and prevention against cervical

cancer

• Rs250m earmarked for the purchase of new medical equipment

• Setting up of 3 new dialysis units

• Recruitment of 310 additional doctors, 255 paramedical staff and

an additional 570 supporting personnel

• Continuation of the 9 Year Continuous Basic Education

programme

• Revamp the school years and new modes of assessment over a

period of 5 years costing Rs2b

• Recruitment of 340 Trainee Educators, 75 support teachers and

600 educators for both primary and secondary schools

• Launching of 3 new polytechnics

• Upgrading of technical and vocational training centres


• Resolving water problems through a Rs3.4b targeted

investment:

- Replacement of some 180 kilometers of old and

defective pipes across the island

- Upgrade and increase of Treatment Plants capacities

- Increase storage through the construction Strategic

Service Reservoirs and new dams

- Subsidy to purchase water tanks for the benefit of

households

• Strengthening law and order through:

- New Supreme Court Tower to be constructed in Port-

Louis with a project value of Rs1.1b

- Upgrading and/or relocation of district courts

- 6 new police stations and new Divisional Headquarters

- Two more Detention Centres

- New laboratory for the Forensic Department at a cost of

Rs235m

- A modern Police Academy at the Réduit-Ebene area

- Recruiting of 900 additional Police Constables, 30 cadet

officers and Recruitment of 100 fire and rescue officers

- Rs292m for the modernising the fleet of vehicles

- Modernisation of police equipment at a cost of Rs115m


PwC


• Setting up a Responsible Gambling and Capacity Building

Fund.

• Restructuring of the Gambling Regulatory Authority

• Reinforcement of the ‘Police des Jeux’

• Government to divest in both the ownership and

management of casinos

• Organise regulated betting games in hotels for non-residents

and foreigners only

• On-line betting restricted to non-residents and foreigners.

• Extension of the Rodrigues runway estimated at Rs2b and

Rodrigues Airport Terminal for Rs40m

• Consultant to be appointed to finalise Master Plan for the

Port Mathurin harbour

• Construction of social housing units with 1,000 over next

three years

• Acquisition of two new generators to secure continuous

electricity for Agalega

• ‘Made in Moris’ initiative: Increase in the Bid Price-

Preference to 20% for locally manufactured goods in respect

of the procurement exercise by public sector bodies

• Placement of 200 trainee engineers in public sector bodies

• Employment of 2,000 unemployed under the YEP

• 7,200 vacancies and new posts in the civil service

• Setting up of a National Employment Agency

• Set up of an exclusive Bio-Farming/Organic zone with comprehensive modern infrastructural facilities at Britannia Rs20m

• Feasibility study for a Bio-Technology Institute • Establishment of a new tea nursery at La Brasserie, providing

seedlings free to growers and giving a subsidy on fertilizers • Re-opening of the ex-Dubreuil tea factory to promote tea and

other agro processing activities

• Setting up of a World Class Research Institute of Oceanography

with the help of the National Institute of Oceanography Goa in

Mauritius

• Incentives for the setting up of common facilities on land for

aquaculture and fish processing

• The Mauritius Ports Authority will construct breakwaters at Fort

William to provide shelter for approximately 120 fishing vessels

• Intake of 1,200 trainees in the Mauritius Maritime Training

Academy to address the human resources constraint in the

maritime sector

• Transparency, accountability and good governance

underpinning the public section

• Allocation of state lands and renewal of lease agreement will be

posted online

• Divestment of targeted interest held in different sectors




Measures

implemented

against those

announced in


implemented

All

implemented

3 Number of Smart Cities starting in 2016-2017

150sqm

Minimum threshold for online application for BLPs

Key metrics

Real Estate & Hospitality

Incentives* for buyers and promoters

• Exemption from Registration Duty on acquisition of a newly built dwelling up to Rs6m.

• The incentives for a promoter housing project for Mauritians under the Housing Estate Scheme raised to Rs6m

• No Registration Duty on the first Rs2m of the value of residential land (of up to 20 perches) for first time buyers. No age restriction

• Exemption from Registration Duty on registration of a secured housing loan of up to Rs2m.

• No date restriction on interest relief on secured housing loan.

• Mauritians who previously owned property but who do not own any property as at 29 July 2016 also quality as first time buyers.

1.25 arpent Maximum permissible land size for a villa under PDS

Rs40m Marketing of the Air Corridor initiative

Rs50m Rehabilitation of heritage sites

Rs110m Protection against coastal degradation

* These incentives do not apply on Pas Geometriques, IRS, RES, PDS or IHS

Business facilitation

• Investors who wish to operate a private hospital, nursing home or residential care home can benefit from the facilitation services provided by the BOI.

• Life rights concept extended to developers outside of the Smart Cities to encourage retirees to live and retire in Mauritius.

• Companies in which non-citizens do not hold more than 25% of the shareholding will not be required to seek the approval of the PMO when there is a transfer of property.

• Electronic submission and acceleration of permits for BLP, Outline Planning Permission, Compliance Certificate, Morcellement Permit and Occupational Permit

PwC

Real Estate & Hospitality (Continued)

Other initiatives

• Government will encourage the setting up of residential care homes for foreign retirees.

• A moratorium on rental to lessees who have been allocated State lands far from infrastructure networks.

• The scheme reducing lease rentals by 50% for hotels on State lands undergoing renovation is renewed for 2 years.

• Family Corporation licence to allow High Net Worth foreigners and their dependents to benefit from residency.

• Non-citizens registered with the BOI will be allowed to acquire apartments and business spaces in buildings.

• Maximum size limit of 50 arpents and a minimum requirement to sell at least 25% of residential unit to Mauritian buyers under the Property Development Scheme.

Smart City

• Phase 1 of Heritage City includes the construction of the new parliament, offices and other infrastructure.

Tourist attractions

• Setting up of a world-class aquarium and a national museum.

• Redevelopment of Port-Louis in arts, recreation and culture.

• Hotels allowed to have regulated betting games.

Licence for operators

• Validity for pleasure craft licence extended from one to three years.

• One single licence, consolidating activities of similar nature will be introduced thereby eliminating the requirement to apply for several separate licences to operate one single activity. The list will be determined by the Tourism Authority.




Measures

implemented

against those

announced in


implemented

All

implemented

250 Additional free WIFI hotspots in major public areas

Rs200m

Investment by CEB to provide high speed broadband to Internet Service Providers

50 New e-services will be added to existing government portal

2 Technopoles will be equipped with 3D printers to enable industrial transformation

Key Figures

ICT

Ease of access

• Easy access to information on government services through mobile applications developed by start-ups

• E-licensing platform as single point of entry for permits and licenses

Digital marketplace

• National Payment Switch to be established to reduce transaction costs and boost e-commerce

• Connect exporters to consumers globally via a national e-commerce platform supported by a regulatory framework

Improve connectivity and information sharing

• Information Highway to share information across public sector agencies

Departmental convergence

• Merging of different entities within the Ministry of Technology, Communication and Innovation (MTCI) to meet the evolving needs of the sector

• Strengthen ICT regulatory environment by merging Information Communication Technology Authority (ICTA) and the Independent Broadcasting Authority (IBA)

Improve digital literacy

• Digital tablets as a tool for education at

primary level

• Foster creativity, innovation at secondary level and establishment of dedicated Faculty of Digital Technology & ICT Engineering

Taxation

Corporate Tax 26

Personal Tax 28

Income Exemption Threshold 29

Value Added Tax 30

Other Taxes 32

Tax Administration 40


Our Opinion

Tax Perspective

Public Finance

Sector Reviews

Taxation

About PwC

Corporate Tax

Personal Tax

Income

Exemption

Threshold

VAT

Other Taxes

Tax

Administration

26

Investment Tax Credit

• Tax credit increased from 5% to 15% over 3 years in respect of expenditure in new plant and machinery (excluding motor cars) to companies engaged in:

• manufacturing on textiles

• wearing apparels

• computers

• pharmaceuticals

• ships and boats

• productions of films

• Tax credit of 15% per annum of the investment over 3 years to companies investing in the share capital of a subsidiary engaged in the setting up and management of accredited business incubator - capped at Rs20m investment

• Minimum investment of Rs100m criteria to qualify for tax credit will be removed

• Extension in number of years for carrying forward unrelieved investment tax credit

• Investment window to claim tax credit extended to financial year 2019/20

Corporate Tax

Taxation

• Businesses to contribute to the National CSR Foundation 50% of their CSR fund in financial year 2016/17 and 75% in the following year

Corporate Social Responsibility (CSR)

• Transfer of accumulated tax losses extended to cover cases where:

• the acquiree company is not dissolved but remains in operation as a going concern

• the takeover of a company or transfer has been deemed to be in the public interest

Tax Losses


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Co-operative Society

• Exemption from income tax on income derived from non-sugar agricultural activities

• 8 year tax holiday extended to new enterprises set up by co-operative societies

Global Business Companies

• 8 year corporate tax holiday for Global Headquarters Administration companies

• 5 year corporate tax holiday for Treasury Management Centre companies

• 5 year corporate tax holiday for Overseas Family Corporations

• 5 year corporate tax holiday for Foreign Ultra High Net Worth Individual investing a minimum of USD25m in Mauritius

• 5 year corporate tax holiday for law firms providing legal advisory and international arbitration services to global business clients

• 5 year corporate tax holiday for investment banks with an Investment Banking and Corporate Advisory Licence

Industrial Fishing Companies

• 8 year tax holiday to industrial fishing companies

Corporate Tax (Continued)

Taxation

Small and Medium sized Enterprises

• 4 year tax holiday for existing enterprises with a turnover of less than Rs10m as from year of assessment 2016/2017


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Interest relief on secured housing loan by first-time home-owner

• Income eligibility criteria to benefit from the interest relief on secured housing loan raised from Rs2m to Rs4m

• Interest relief allowed as from the income year 2016/17 irrespective of the date housing loan was contracted

Exemption for dependent child in tertiary education

Personal Tax

Taxation

• Income eligibility criteria for additional deduction is raised from Rs2m to Rs4m

• Tuition fee eligibility criteria for exemption reduced from Rs44,500 to Rs34,800

Income Tax Exemption

• Emoluments derived by a seafarer employed on a vessel registered in Mauritius or on a foreign vessel exempt from income tax

Tax Holiday

• 5 years personal tax holiday to an Asset and Fund Manager licensed by Financial Services Commission and managing a minimum asset base of USD100m

• 5 years personal tax holiday to Foreign Ultra High Net Worth Individuals investing a minimum of USD25m in Mauritius Trading Income

• 8 years tax holiday in respect of business income to be extended to new enterprises set up by individuals qualifying under SME scheme and registered with SMEDA

• 4 years tax holiday in respect of business income of existing enterprises registered with SMEDA with a turnover of less than Rs10m and engaged in qualifying activities under SME scheme

High Net Worth Individuals

• MRA to request High Net Worth Individuals to submit statement of their assets and liabilities


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Category D - Individual with three dependents

Rs480,000

Rs505,000

Rs485,000

Rs495,000

Category A - Individual with no dependent

Rs285,000

Rs295,000

Rs275,000 Rs270,000

Category B - Individual with one dependent

Rs380,000

Category C - Individual with two dependents

Rs440,000

Category E - Retired/disabled person with nodependent

Rs325,000

Category F - Retired/disabled person with onedependent

Rs430,000

2017

2014

2016

2013

2015

Rs395,000

Rs455,000

Rs445,000

Rs345,000

Rs320,000

Rs445,000

Rs435,000

Rs385,000

Income Exemption Threshold

Taxation

Rs405,000

Rs335,000

Rs465,000 Rs455,000


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Exemption from VAT on the following products:

• Breakfast cereals

• Photovoltaic inverters/batteries

• CCTV camera systems, including CCTV digital video recorders

• Burglar alarm systems and sensors

• 3D printer

• locally manufactured bus bodies built on semi low-floor chassis

• Hospital beds with mechanical or electrical fittings

• Commode chairs with toilet bowls

• Briefs for incontinent persons

• Urinary and fecal incontinence bags

• Motor vehicles examination fee (fitness) for a period of one year

• Plant, machinery and equipment to be used in the exploration and mining of seabed minerals

Value Added Tax

Taxation

VAT exemption on products

VAT Refund Scheme for small planters

VAT Refund Scheme extended to the following equipment:

• Fencing and poles

• Insect/bird proof nets

• Protective masks

• PH meters and EC meters

• Bush cutters

VAT Refund Scheme on construction/acquisition of new residence

• VAT refund limit raised from Rs300,000 to Rs500,000

• Refund on construction subject to production of VAT receipts subject to a cap based on floor area

• Construction to be completed by 20 June 2020

• Scheme extended to acquisition of house from property developers and construction on top of existing building

• Construction cost or purchase price limit raised from Rs2.5m to Rs4m

• Household income eligibility threshold increased from Rs650,000 to Rs2m


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Change in time of supply

• VAT applies when supply is made and not when invoice is issued or payment received

Value Added Tax (Other)

Taxation

VAT on services sourced from abroad

• Non VAT registered persons are required to charge and remit VAT to MRA on services received from abroad

Input VAT over-claimed

• Penalty of 20% of amount of input VAT over-claimed limited to Rs100,000

VAT on deregistration

• No excess input VAT will be refunded on deregistration

• No output VAT to be remitted to MRA on stock held in last taxable period prior to deregistration

Bunkering activities

• Exemption from VAT extended to vessels engaged in delivery of bunker fuel within port limit

Healthcare and Medical Tourism

• Exemption from VAT on the construction of nursing homes and residential care home

• Entrance fee to aquariums of international standard subject to investment conditions made zero rated

Leisure


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Property Taxes

• Exemption from Registration Duty on a newly built dwelling (including off-plan or during construction) acquired for Rs6m in the period from 01 September 2016 to 30 June 2020

• Threshold for Land Transfer Tax exemption under the Construction of Housing Estate Scheme raised from Rs4m to Rs6m for sales before 30 June 2020

• Exemption from Registration Duty on the first time acquisition of bare residential land on the first Rs2m of land value provided the acreage does not exceed 20 perches. The exemption applies to anyone who does not own any residential property as at 29 July 2016 irrespective of age

• Exemption from Registration Duty on the registration of a secured housing loan of less than Rs2m to a Mauritian

• Exemption from Land Transfer Tax to an employer providing free social housing to employees on land of less than 7 perches

Customs and Excise duties

• Exemption from Customs Duty on (i) material used in the manufacture of medical devices and (ii) lighting equipment used in film making

• Excise duty of 3% per gram on sugar content on milk based products such as “Perette”, “Yop” and “Dahi”, juices and other sweetened beverages as from 01 October 2016

• Exemption from excise duty for any vessel engaged in the delivery of bunker fuel within the port limit.

Other Taxes

Taxation


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Gambling

• 2% levy on net stakes of all gambling licencees (except the Mauritius National Lottery Operator)

• 30% tax on winnings from on-line betting for non-resident and foreign punters

• Increase in betting duties from Rs16,000 to Rs30,000 for each race meeting for bookmakers operating outside the racecourse

Other Taxes (continued)

Taxation

Environment Taxes

• 15% levy on specific pesticides, herbicides and fruit ripeners as from 30 July 2016

• 25% levy on washing machine, mercury vapour lamps, sodium high pressure and metal hallide lamps

• The CO2 levy/rebate scheme on motor cars suspended as from 30 July 2016

• The Shooting and Fishing Lease Tax abolished


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Custom Tariff Rates

(from 30 July 2016)

Men’s or boys’ suits Rs165/unit 0%

Suit type jackets and blazers Rs130/unit 0%

Women’s or girls’ suits Rs65/unit 0%

Track suits Rs30/unit 0%

Trousers, breechers and shorts Rs30/unit 0%

Shirts, skirts, blouses, tops and dresses Rs30/unit 0%

T-Shirts and singlets Rs15/unit 0%

Baby diapers 15% 0%

Baby wipes 30% 0%

Dolls and toys representing animals 15% 0%

Lighting sets 15% 0%

Table, kitchen and other household articles of

aluminum, porcelain and china 15% 0%

Statuettes 10% 0%

Spirituous products 15% 30%

From To


Taxation


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Taxation

Custom Tariff Rates

(from 30 July 2016))

Glass Mirrors 15% 0%

Drinking Glasses 15% 0%

Building materials of glass (glass cubes, paving

blocks etc.) 15% 0%

Coated wires and electrodes 15% 0%

Motor vehicle engines and parts thereof 15% 0%

Pumps for dispensing fuel or lubricants for filing

stations or garages 15% 0%

Primary cells and batteries 15% 0%

Lead acid electric accumulators 15% 0%

Electric heating apparatus 15% 0%

Trailers and semi-trailers 15% 0%

Horses Rs30,000/unit 0%

Sugar 0% 15%

From To


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Excise Duty (from 30 July 2016)

Beer (per litre) Rs35.90 Rs37.70

Spirit cooler (per litre) Rs44.70 Rs49.20

Fruit wine (per litre) Rs27.80 Rs30.60

Made wine (per litre) Rs59.50 Rs65.50

Wine of grapes (per litre)

In bulk for bottling purposes

In bottle

Rs95.70

Rs168.00

Rs105.30

Rs184.80

Champagne (per litre) Rs800.00 Rs880.00

Rum (per litre of absolute alcohol) Rs471.00 Rs518.10

Cane spirits (per litre of absolute alcohol) Rs471.00 Rs518.10

Whisky (per litre of absolute alcohol)

In bulk for bottling purposes

In bottle

Rs910.00

Rs1,455.00

Rs1,001.00

Rs1,600.50

Liqueur (per litre of absolute alcohol) Rs 320.00 Rs 352.00


Taxation

From To

Alcoholic Products


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Excise Duty (from 30 July 2016)

Cigars (per kg) Rs12,845 Rs16,056

Cigarillos (per thousand) Rs7,500 Rs9,375

Cigarettes (per thousand) Rs3,717 Rs4,646


Taxation

From To

Alcoholic Products


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Type of motor car and cylinder

capacity (c.c.)

Conventional motor cars:

Up to 550 c.c.

551 – 1,000 c.c.

1,001 – 1,600 c.c.

1,601 – 2,000 c.c.

Above 2,000 c.c.

15%

55%

55%

75%

100%

0%

45%

50%

75% (no change)

100%(no change)

Hybrid Motor Cars:

Up to 1,600 c.c.

1,600 – 2,000 c.c.

Above 2,000 c.c.

55%

75%

100%

25%

45%

70%

Electric Cars:

Up to 180 Kw

Above 180 Kw

25%

25%

0%

25% (no change)


Taxation

From To

Motor cars


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Electric Engine Power (kW)

Not exceeding 27.5 kW Rs8,100

Rs8,100

From 27.6 kW to 40.0 kW Rs16,300

From 40.1 kW to 52.5 kW Rs26,000

From 52.6 kW to 57.5 kW Rs32,500

From 57.6 kW to 65.0 kW Rs39,000

From 65.1 kW to 70.0 kW Rs58,500

From 70.1 kW to 77.5 kW Rs58,500

Rs16,300

From 77.6 kW to 95.0 kW Rs78,000

From 95.1 kW to 102.5 kW Rs78,000

Rs26,000

From 102.6 kW to 125.0 kW Rs97,500

From 125.1 kW to 150.0 kW Rs97,500 Rs32,500

From 150.1 kW to 180.0 kW Rs97,500 Rs39,000

Exceeding 180.0 kW Rs97,500 Rs97,500 (no change)


Taxation

From To

Registration Duty on Electric Vehicles


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Personal Taxation

Tax Administration

Taxation

Corporate Taxation

• Time limit of 2 years to submit amended income tax returns

• Companies (except GBC1 and trust) not in operation required to file a declaration instead of an income tax return

General

• High Net Worth Individuals with net income exceeding Rs15m per year or assets exceeding Rs50m to submit a Statement of Assets and Liabilities to the MRA

• Time limit of 2 years to submit amended income tax returns

• PAYE return to provide PAYE withheld per employee with National Identity Number

• Employer to provide details on income paid to all employees irrespective of PAYE deduction

• Reduced penalty provisions granted to SME extended to individuals not in business with maximum penalty reduced to Rs5,000 and penalty for late payment of taxes reduced to 2%

• Collection of social security contributions of employers by MRA

• Integration of the Registrar-General’s Department with the MRA to recover Registrar-General’s Department tax arrears

• Introduction of an Alternative Dispute Resolution mechanism for tax appeal cases of more than Rs10m, except Customs and Excise Duty disputes

• Definition of ‘Fraud’ to include non-submission of tax returns for the purposes of revenue administration

• Contractor to provide tax clearance certificate to MRA before being allocated Government contracts of more than Rs5m

• Tax Deducted at Source (TDS) extended to:

• Services provided by accountants and tax advisers

• Management fees paid to individuals

• 10% TDS on non-resident entertainers and sport persons made final

• Requirement to provide for Business Registration Number or National Identity Number of payee in TDS return


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Tax Administration (Continued)

Taxation

General

• Penalty will be introduced on losses or refund over-claimed

• Disclosure regime introduced to allow taxpayer to express doubts around interpretation and application of law and providing the taxpayer with protection from penalties and interests

• Non-remittance of VAT, PAYE and other TDS will constitute a criminal offence

• Minimum ageing period for rum to be considered “matured” reduced to 2 years

• Liquor licences in respect of tourism activities to be issued by the MRA

• Automated warehousing process of goods extended to cover excise warehouses

• Distiller-bottler now allowed to manufacture combustible fuels and other bio-fuels from alcohol residual

• Alignment of definitions of alcoholic beverage, cider, perry and sparkling wine with Food Regulations

Excise Duty

Customs

• 5% penalty and 0.5% interest per month on late payment of unpaid duty

• Time limit for payment of duties and taxes in respect of a validated Bill of Entry reduced to 14 days

• Time limit to initiate proceedings for recovery of taxes and penalties removed

• Procedures for compounding of customs offences aligned with other revenue laws

• Payment of customs duty, excise duty and VAT of Rs50,000 or more to be made electronically

• Duty exemption facilities on motor vehicle to heirs in case of death of beneficiary

About PwC


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Financial

Services

SMEs &

Manufacturing

Agri-Business

Public Sector

Real Estate

ICT

43

PwC helps organisations and individuals create the value

they’re looking for. We’re a network of firms in 157

countries with more than 208,000 people who are

committed to delivering quality in assurance, tax and

advisory services.

PwC in Mauritius is recognised as a thought leader and a

change initiator, where more than 300 professional staff

combine the resources of our global network with detailed

knowledge of local issues.

We favour an industry approach to serve a large number

of companies doing business in Mauritius, ranging from

multinationals, a cross section of local businesses, to

public institutions.

Find out more and tell us what matters to you by visiting

us at www.pwc.com/mu

Talk to Us Our Thought Leadership events

• Corporate Reporting Awards

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• The Africa Business Agenda

• Incentives for the Mauritius Diaspora

Visit our budget page to watch our videos

About PwC

About PwC

http://www.pwc.com/mu/en/cra/index.jhtml

http://www.pwc.com/gx/en/global-annual-review/index.jhtml

http://www.pwc.com/ke/en/africa-business-agenda/index.jhtml



https://www.pwc.com/mu/en/budget/2015/diaspora_scheme.html

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This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the

information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the

accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Ltd, its members,

employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to

act, in reliance on the information contained in this publication or for any decision based on it.

© 2016 PricewaterhouseCoopers Ltd. All rights reserved. In this document, “PwC” refers to Mauritius member firm, and may sometimes refer to the PwC

network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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